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Brent Crude Oil Market Update

8/22/2022 2:50 PM

Brent Crude Oil quotes have been declining for the third month in a row and are currently around 95.00. Pressure on prices is exerted by a number of long-term negative factors.

First of all, the drop in demand for "black gold" may be triggered by the risks of a global economic downturn, which have recently only intensified against the backdrop of unprecedented inflation in the eurozone and the UK, as well as a slowdown in production in China and the American construction market. Market participants are no less concerned about the continuation of the policy of tightening monetary parameters by the US Fed, which, in turn, strengthens the position of the US currency. It should be noted that according to a recent statement by the president of the Federal Reserve Bank of Richmond, Thomas Barkin, the regulator may move to an even faster rate hike, since the inflation rate in the country remains too significant.

Other sources of pressure on the market include the introduction of restrictions on the use of electricity for industrial consumers in a number of Chinese provinces. These measures are associated with an increased load on the networks during a prolonged hot period and may cause an additional decrease in production volumes and demand for petroleum products. In general, the mid-term development of the situation on the oil market is still seen as negative. 

Technically, the price is close to the level of 93.45 (Fibo retracement 61.8%, Murray [-1/8]), a breakdown of which will give the prospect of a decline to 87.50 (Murray [-2/8]), 82.00. The key for the "bulls" is the 100.00 mark (Fibo retracement 50.0%, Murray [0/8]), supported by the middle line of the Bollinger Bands. Consolidation above it may lead to growth to the area of 108.00 (Fibo retracement 38.2%), 112.50 (Murray [2/8]).

Technical indicators do not give a single signal: the Bollinger Bands are directed downwards, confirming the continuation of the downward trend, but the Stochastic is directed upwards, and the MACD histogram is stable in the negative zone. 

Resistance levels: 100.00, 108.00, 112.50. | Support levels: 93.45, 87.50, 82.00.

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